Who is Eligible to Apply?

Every person, who is in receipt of income which is subject to TDS under the respective section and where the income of the recipient justifies non-deduction or lower deduction of income tax based on their estimated final tax liability, can apply for Lower/ No Deduction Certificate.

The eligibility of an Assessee to claim the benefits of this rule is determined by the Assessing Officer based on the existing and estimated liability of the Assessee, which is determined by considering the following:

  1. Tax payable on estimated income of the previous year relevant to the Assessment Year
  2. Tax payable on the assessed or returned income of the preceding three years
  3. Existing liability under the Income-tax Act, 1961
  4. Payment of advance tax for the assessment year relevant to the previous year until the date of making the relevant application
  5. Tax deducted at source for the assessment year relevant to the previous year until the date of making the relevant application
  6. Tax collected at source for the assessment year relevant to the previous year until the date of making the relevant application

Permissible sections for claiming the benefit of section 197/197A

Incomes/Payments on which tax is deducted at source fall under the ambit of section 197/197A.
However,the benefit of the said sections are not available for certain incomes / payments on which tax is deducted at source under below mentioned sections viz;

  • 194B: Winnings from Lottery
  • 194BB: Winning from Race Horses
  • 194DA : Payment in respect of Life Insurance Policy
  • 194E: Payment to Non Resident Sportsmen or Sports Association
  • 194IA: Payment on transfer of certain immovable Property other than Agricultural Land

Timeline for Application

Income-tax provision does not provide for a deadline to make an application under Section 197. However, where regular TDS is being made on income throughout a financial year, it is advisable to make an application at the beginning of the financial year and in case of one-off / occasional incomes, application can be made as and when the need arises.

Application Process [3]

The application for the Certificate can be filed online through Form -13 available on the TDS Portal www.tdscpc.gov.in.

It takes around 25-30 days to complete the process and obtain Certificate of Lower /No Deduction. In certain cases the Assessing officer may call for further information and Documents for validation of details mentioned in the application. It may at times also require meetings with the Assessing Officer for verification or validation of documents and details provided.

[3] Refer Appendix I on the last page for list of Pre-requisites for Application

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